Please keep in mind that this is not a life pension with SAWW / COLA increase commutation calculator. The actuarial math involved in performing that calculation is … intense.

As an interesting side note, this week I saw my very first DEU commutation of a life pension with COLA increase. Unlike the typical commutations everyone receives from the DEU, this commutation calculation was devoid of the actual methodology used. I was pretty disappointed to find this out.

Last week while Steve was at the Sacramento WCAB he heard about a recent case that held the COLA / SAWW adjustments and increases are calculated based upon the first January 1 following the date of injury. 12

This case involving SIF (the subsequent injuries fund) is from the San Jose WCAB. The name of the case is “XYZZXSJO2 v. Subsequent Injuries Benefits Trust Fund, ADJ 1510738, SJO 0251902”. The name of the Applicant was anonymized to protect their identity. 34

Thus far the conventional wisdom has been that the COLA/SAWW increases are calculated starting with the first January 1 after life pension gets paid out. This is a tremendous change in the COLA/SAWW calculation of life pension.

Assuming a 1/1/2003 injury at exactly 70% permanent partial disability, there would be 426.5 weeks of permanent disability paid after the permanent and stationary date before the life pension gets paid out. This equates to 8.2 years from the permanent and stationary date that has, thus far, not been taken into account with life pension calculations to date. To put this in perspective, if someone had an injury on 1/1/2003 and became P&S on that same date5 , the traditional method of calculating the life pension with COLA / SAWW increase would be too low by approximately 44%.

At the moment I’m finalizing a COLA / SAWW life pension calculator to determine what the future life pension rates are assuming a COLA / SAWW increase of 4.7% per year. If you’re interested in becoming a beta tester for this COLA / SAWW calculator for life pension increases, please drop me a line and ask for access.

Unfortunately, I don’t have a citation for the 4.7% COLA / SAWW increase, but I believe it to be the offiical average used by the DEU6 to calculate commutations of COLA / SAWW increases and adjustments. If you have an official citation or document from the DEU, please drop me a line so I can include that citation here!